More Than insurer RSA reported a 72 per cent fall in half-year profits yesterday as chief executive Stephen Hester admitted the cost of his “clean-up” of the group was proving higher than initially expected.
The £69m pre-tax earnings figure compared to £250m for the same period last year though it was a marked improvement on the £494m loss in the second half of 2013.
RSA was hit by £57m in write-downs from its troubled Ireland business with further one-off costs including £38m for redundancies as jobs were cut back across the group, with earnings also dragged down by storm claims.
It warned that there would be further charges as restructuring work is completed.
Mr Hester, the former Royal Bank of Scotland boss, was hired to revive the group’s fortunes after predecessor Simon Lee left following a series of profit warnings and the uncovering of a £200m black hole in RSA’s Irish division.
The new boss has already undertaken a £775m rights issue and disposed of a series of nearly £600m worth of assets from China to Poland. Dividends, scrapped earlier this year, are on course to return for the 2014 full-year.
Mr Hester said: “RSA’s action plan is going well. Since announcing it five months ago, we have made strong progress improving strategic focus and capital health.
“While first half profits are modest, they reflect further balance sheet and reserve clean-up as well as above normal weather costs.”
The chief executive, who spent five years dragging RBS back from the brink after its near-collapse, said progress on RSA’s turnaround was ahead of expectations so far.
Mr Hester added: “As so often in restructuring situations, the ‘clean-up’ costs are proving higher than initially expected, but these are outweighed by gains on disposals which are well ahead of plan.”